The Next Stage – The Private Purchase Contract
Following signing of the Reservation contract the next stage of the purchase is the Private Purchase Contract
Difference With Reservation Contract
The main difference between the reservation contract and the private contract is the first is subject to due diligence, so if there are issues with property the buyer can withdraw, in the second the due diligence is presumed to have been completed.
Amount To Be Paid
Furthermore, the amount of the payment when signing the private purchase contract is 10% of the price (less any initial payment) and the final conditions of the purchase and timelines are defined.
Due Diligence
From the buyer’s side it is important that all the legal and other checks have been completed before signing this, as it is no longer possible to put any reservations within this contract, as due diligence is presumed to have been completed.
Advantages
The advantage for both the buyers and sellers is that, whilst at the reservation contract there is often a margin for each party to pull out, even it means forfeiting the deposit, at the stage of the private purchase contract there is either no margin and you legally have to complete, or forfeiting is very expensive (10% of the property value).
Forms
The contract can take several forms, from the condition that if either of the parties withdraw it is breach of contract and the other party can force the sale, to the 10% deposit is simply forfeited and the sale is annulled.
In either case it is generally accepted that it is very difficult or costly for either party to withdraw.
You can read about the different types of contract clicking here.
The contract is normally signed by the lawyers of each party.
Once the private purchase is signed, the next step is completion at the notary where the buyer pays the balance and the sellers’ handover the keys.
To read more about the others steps in the click on the links below
Note: The above is for general guidance and no substitute for professional legal advise that I would advise buyers to take before entering into any contract.
DO YOU HAVE A QUESTION?
Ricky Bache
Estate Agent
B.Sc Economics
(HEC Lausanne )
Asesor Credito Hipotecario
(UPV Valencia)
Tel : +34 609 50 22 44
ricky@marbellaconnect.com
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